2009 McDonnell vs. 2010 McDonnell.

Candidate Bob McDonnell, September 2009, on Governor Tim Kaine’s suggestion that state employees should contribute to their own retirement accounts:

These are tough economic times. I understand the governor has been forced to make difficult decisions to balance the budget. As Attorney General, I made tough choices as well, cutting the office’s budget by 14% over a two-year period. But the decision to suspend a scheduled payment to the state’s Retirement Fund is a budget gimmick that will reduce the solvency of the fund at a time when the funded reserve has already declined. This should be of concern to every state employee and retiree. The tough fiscal climate also is no excuse for breaking a longstanding commitment to the men and women who have dedicated their careers to the service of Virginia’s people. […] But penalizing hard working state employees, and breaking a promise made to them, when they started their careers, cannot be the solution. […] But we will not make government work better by pulling the rug out from under the very people who serve in state government and will be charged with implementing these much-needed reforms.

One week ago:

Virginia Gov. Robert F. McDonnell (R) proposed Thursday that 87,000 state employees begin making annual 5 percent contributions—the first in nearly three decades—to the state’s retirement fund as a way to shore up the commonwealth’s pension system.

[…]

“This is a start for fixing a pension system that has been out of whack for years and years and years,” McDonnell told reporters. “I will not pass on a broken system to another governor. I will make every effort this year to begin to fix this system.”

But, wait, there’s more:

McDonnell was criticized after his decision to dip into the retirement fund to close a budget gap, which also required billions in spending cuts. He told reporters Thursday that borrowing from the Virginia Retirement System—a maneuver he and the General Assembly jointly undertook just a few months ago—”frankly, wasn’t a good idea.”

He said that the money would be repaid and that the state had not siphoned enough to affect the already-underfunded system in the long haul.

It’s swell that the governor is having so many valuable growth experiences, but wouldn’t it be great if he’d done his learning on his own time (and dime)? I’m looking forward to his quiet surrender on fixing transportation and privatizing the liquor stores. No doubt he’ll learn a lot from the experience.

(Via PolitiFact Virginia)

20 thoughts on “2009 McDonnell vs. 2010 McDonnell.”

  1. Eerily similar to Candidate Obama v. President Obama. Except that in Bob’s case, it’s one issue instead of a dozen.

  2. @Waldo: I’m sure you’re aware of more background info than I am, but from reading your quotes alone, it would seem that two different things are happening here. In 2009 McDonnell was against skipping payments to the retirement fund while in 2010 McDonnell was supporting workers contributing 5% of their income to their retirement. (Novel idea! Somehow I have to contribute quite a bit more than 5% since the government doesn’t contribute a big chunk!)

    So basically, could you buttress those quotes a bit more to clearly show the opposing statements in 2009 and 2010?

  3. Do you think Republicans will figure out that taking on a transportation bond repayment schedule is just a burden on taxpayers with interest added? Someone really should look at the state of the bond market before they turn Governor Bob loose with his latest financial dodge. They might even notice that Bob wants to put 1/3 of Virginia’s bond borrowing cost onto Federal taxpayers. Borrow and Spend, Borrow and Spend!

  4. I’m sure you’re aware of more background info than I am, but from reading your quotes alone, it would seem that two different things are happening here.

    I follow what you’re saying, Hans, and I do see your perspective on the specifics of this, which I hadn’t considered when writing this. What I’m contrasting is McDonnell’s portrayal of the state’s ongoing contribution to retirement as “a promise” that’s “a longstanding commitment to the men and women who have dedicated their careers to the service of Virginia’s people” and his new perspective, which is that it’s no longer a promise, no longer a commitment, and state employees need to start ponying up their own money.

    What I’m not criticizing him for is his proposal to require state employees to pay into that system, not only because I don’t know enough about how VRS works (despite that some of my own retirement money is in VRS), but because it strikes me, at least conceptually, as a reasonable proposal.

  5. Only in the government can workers have a retirement account they don’t put any of their own money (salary) into. While I can’t tell if this is a flip flop -it might be in spirit- it does address the fact that goverment workers are often unaware of how much better they have it dollar for dollar verse private sector workers.

    In these times of cut backs it’s nice to know it’s hard to get fired even if you can’t get a raise. I’m certainly not saying it’s all good for UVa and other state employees just that they sometimes need to understand how hollow their complaints sound to those who hope they have any kind of job next year.

  6. It’s just not true that “only in the government can workers have a retirement account that they don’t put any of their own money into”. I operate a very small business that provides a retirement account for all employees and none of them have ever been asked to put their own money into the account.

    I have no idea how it compares to the retirement program provided to Virginia’s state employees, but it’s certainly going to take care of me and other long-term employees rather well.

  7. What Harry said. My company provides a percentage of an employee’s salary to their retirement plan with no requirement that they also contribute. I can not then take those funds and use them to finance the business, or back a loan – something that apparently the state can do. That is irresponsible.

  8. When I worked in the private sector, I had a retirement plan that the company contributed to — it was one of my benefits. I chose not to contribute more.

  9. Hans — there ARE two different things going on here, and Governor Bob has flip-flopped on both of them. First, in the quote that Waldo provided, Bob called skipping a payment to the retirement plan a stupid “gimmick.” But that’s what he relied on to balance the budget in 2010. At least he is now willing to admit that his “gimmick” was a bad idea, though he has not yet suggested how and when he intends to fix that bad idea.

    The second issue is the requirement that state employees contribute to their own retirement plans. In Waldo’s lead-in to the McDonnell quote from September, 2009, he describes it as being a response to Governor Kaine’s suggestion that state employees contribute to their own retirement plans, the suggestion being that he opposed it. Unfortunately, the quote itself doesn’t contain any reference to that proposal, but I seem to recall that Waldo is correct in his lead-in. On that assumption, what we have now is clearly a flip-flop, since he is now proposing what he rejected 15 months ago.

    I don’t fault anyone for changing his mind when new facts come in. If McDonnell would just say, “You know, I opposed it in 2009, but things have gotten even more desperate than they were in 2009, and it’s got to be on the table now if we aren’t going to cut education,” I could respect that.

    But this is not a case of “Things are different now, and I have changed my mind.” It is a case of “What? I never said any such thing. You have it on tape? Well, that’s my story and I’m sticking with it.”

    It doesn’t offend me in the abstract that state employees might be asked to pay into their retirement accounts; fringes are part of anyone’s compensation package, and the details of those packages are subject to change. Some employers pay all of the employees’ health insurance premium. Some pay only part. That’s a practical issue, not a moral issue. Ditto for retirement plan contributions. It’s a practical issue, not a moral issue. But let’s be honest about it — it’s a pay cut for state employees.

  10. What Harry and Bubby have described is a defined benefit plan. DB plans *can* be a fine benefit for employees… if they want to keep that particular job for the rest of their lives. Otherwise, not so much.

  11. Wrong, I. Publius. My plan is not a defined benefit plan. It’s known as a Simplified Employee Pension (SEP). As employer, I contribute to the plan, which is directed to the investment vehicle of each of my employees’ choice. They are immediately 100% vested. Once I make the contribution, I have no control over the assets. If they leave my employment, they take their pension with them. From that point on, it acts very much like an IRA.

  12. In Waldo’s lead-in to the McDonnell quote from September, 2009, he describes it as being a response to Governor Kaine’s suggestion that state employees contribute to their own retirement plans, the suggestion being that he opposed it. Unfortunately, the quote itself doesn’t contain any reference to that proposal, but I seem to recall that Waldo is correct in his lead-in.

    Hey, you’re right. Apparently I wanted that to say something other than what it says. ;)

  13. So what the Governor is proposing is a 5% pay deduction. The reason why the employee’s portion is paid for is because 30 years ago the government decided to do that in leiu of a pay increase. So where will the 5% pay increase come from?

  14. My employees are (by law) immediately 100% vested in the contribution I give them. It is a demonstration of respect and righteous compensation for their valued contribution. And I suspect that where ever they may go they will find my yankee dollars very useful. So yeah, wrong.

  15. Bubby, your claims about what you bestow upon “your employees” carries as much weight as any other anonymous comment on this blog… this one included. ::eye roll::

  16. IP: You must learn something about employer SEP and 401k plans if you ever hope to escape wager-earner status. This is Small Business 101, Princess.

  17. A friend e-mailed this to me after having trouble posting it here:

    Virginia’s government employees are severely underpaid (see: http://www.roanoke.com/editorials/commentary/wb/99578, “In late 2005, a Senate Finance Committee report showed, on average, a 17 percent gap had emerged between salaries of state employees and their private-sector counterparts”). There was a 3% and a 4% raise in 2006 and 2007, but Virginia’s government employees have not seen a raise since. Those raises barely dented the gap.

    As a former Virginia state government employee, I can tell you that many of us were very hard workers who cared greatly about the service we provided. Not to toot my own horn, but I worked very hard for the state and feel that I did a good job. Further, I was young, only 30 when I left state government. My reason for leaving was simply that I am worth a lot more in the private sector. While I greatly miss serving the public, I also like putting food on the table for my family. How many other smart, innovative, and young persons are turning away from government employment because they know they can make more money in the private-sector?

    Failing to provide even small cost-of-living increases to state employees and NOW forcing a 2% cut in their salary is a slap in the face to the people who make sure we have working stop lights, safe streets, a place to vote, and people to teach our children (not to mention the teachers themselves). Virginia’s governmental employees have worked harder than ever to make up for the hiring freezes and slashes in the budget (many now working jobs that used to be split between 2 or sometimes 3 employees) and now they are being punished for their hard work because of a political gimmick to plug the budget gap last year. Yes, many are suffering in this economy, but governmental employees have been suffering for much longer with the gap in pay.

    I, like Waldo, agree that government employees should pay into their retirement funds, but not until this gap between government employees and their private sector counterparts is fixed.

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